July 17 (Bloomberg) -- Senators pressed General Motors Co.
Chief Executive Officer Mary Barra about retaining the company’s
top lawyer and encouraged her to expand a victim compensation
program to more cars recalled for ignition-switch defects.

Barra responded that General Counsel Michael Millikin is a
key member of her team for fixing the Detroit-based company and
that there were “different facts” in the various recalls and
it wouldn’t be appropriate to treat other models with faulty
switches the way the company is handling 2.59 million small cars
that were recalled years after a part was secretly fixed.

In her fourth appearance before a congressional panel,
Barra returned to the Senate, where she faced some of her
harshest questioning in April. While again facing some pointed
criticism, she was congratulated for her leadership in trying to
treat victims fairly and ensure the company never again fails to
recall dangerously defective vehicles.

“While General Motors’ legal department came under
withering attack from the Senate committee investigating the
ignition switch debacle, GM CEO Mary Barra emerged largely
unscathed in the questioning, and I’m certain that is seen as a
win by the top executive team at GM,” Jack Nerad, executive
editorial director and senior analyst for Kelley Blue Book’s
KBB.com said in an e-mail.

Bad Culture

Senator Claire McCaskill, the Missouri Democrat, opened
today’s hearing into GM’s slow recall of fatally flawed ignition
switches by saying the company should have dismissed its top
lawyer. A culture of “lawyering up” as a defense against suits
“killed innocent customers” of GM.

“I don’t get how you and Lucy Clark Dougherty still have
your jobs,” McCaskill said to Millikin referring to GM’s
general counsel for North America. “This is either gross
negligence or gross incompetence on the part of a lawyer, the
notion that he can say, ‘I didn’t know?’”

Barra, in one of her strongest defenses yet of her staff,
disagreed. The second-generation GM lifer who was promoted to
the top job six months ago reiterated her pledge to fix what
went wrong and to dedicate the company to excellence and safety.

“To do that, I need the right team, and Mike Millikin is a
man of incredibly high integrity,” Barra said. “He has
tremendous global experience as it relates to the legal
profession. He’s the person I need on this team. He had a system
in place. Unfortunately, in this instance, it wasn’t brought to
his attention, frankly, by people who brought many other issues
forward. He is a man of high integrity and he is the right
person.”

The senator told Barra that excusing Millikin’s inaction
represented a “blind spot,” saying that Eric Shinseki wasn’t
told of long delays at Veterans Affairs hospitals, yet he was
removed as secretary of the V.A. “He’s gone.”

Victim Fund

Millikin appeared before the panel today with Barra, as did
Anton Valukas, the lawyer who led GM’s internal investigation,
and Rodney O’Neal, CEO of Delphi Automotive Plc. Kenneth
Feinberg, who is administering the compensation program for
victims of crashes involving the recalled Chevrolet Cobalts and
other small cars, appeared separately.

Regarding the suggested expansion of Feinberg’s effort,
Barra told senators including Richard Blumenthal, the
Connecticut Democrat, that it wouldn’t be appropriate to include
owners of cars other than the Cobalt, Ion and four other U.S.
models.

“I would say there’s very different facts related to what
happened with the Cobalt ignition-switch situation versus the
other actions we’ve taken,” Barra said. “Very different.”

Record Recalls

GM has recalled almost 26 million vehicles in the U.S. so
far this year, an annual record. The automaker has sped up the
pace of recalls since February, when the company announced an
ignition-switch defect that engineers had known about for years.

Even as Barra plays defense, the record recalls show no
sign of depressing the automaker’s vehicle sales or stock price.
GM shares had risen 5.4 percent from Feb. 12, the day before it
announced the recall that eventually covered 2.59 million small
cars, through yesterday’s close. GM shares fell 1 percent to
$37.10 at the close in New York.

In her prepared remarks, Barra reiterated that the
company’s employees won’t forget the lessons of the recall, and
that they’re working hard to address the underlying issues.

McCaskill, in her opening statement, praised Barra for
stepping up with courageous leadership. While some see GM’s
large number of recalls as a problem, the senator called it a
“good sign” that the company is doing right by its customers.

Tough Questions

Barra’s last trip to Congress came about a month ago before
a House panel in which she faced some skepticism from
representatives who questioned whether she has the ability to
change the automaker’s corporate culture.

That hearing took place after GM released the findings of a
three-month internal investigation led by Valukas, a former U.S.
attorney, that showed that engineers and lawyers knew about
potentially faulty ignition switches in the Chevrolet Cobalt and
other compact cars linked to at least 13 deaths for more than a
decade while corrective action was stymied by a pattern of
incompetence and neglect.

The ignition switch can inadvertently shut off when jarred,
cutting power to the engine and deactivating air bags. The delay
to recall the vehicles has led to investigations by the
Transportation Department, both chambers of Congress and federal
prosecutors.

Lawyers Failed

Millikin said some of his staff failed the company in
handling the ignition-switch defect. He apologized for how the
recall was handled and said he will work to ensure such a
failure never happens again.

“We had lawyers at GM who didn’t do their jobs; didn’t do
what was expected of them,” Millikin said in his statement.
“Those lawyers are no longer with the company.”

GM appointed a “well-respected” outside law firm to
review the company’s litigation practices, Millikin said in
prepared remarks before today’s hearing. The company has hired
Quinn Emanuel Urquhart & Sullivan LLP, Jim Cain, a GM spokesman,
said today.

Quinn Emanuel is a 650-lawyer business litigation firm with
offices in 17 cities, including Los Angeles, New York, London
and Hong Kong. Cain said he didn’t know which office or which
lawyers would be working on the review. Elizabeth Urquhart, a
firm spokeswoman, didn’t immediately return a call for comment.
Quinn Emanuel lawyers have tried 2,311 cases and won more than
$39 billion in judgments and settlements, the firm said on its
website.

The Valukas investigation found that Millikin hadn’t been
informed of the lengthy review of the Cobalt switch until the
recall decision was made in 2014 and that he was also unaware of
litigation involving fatal accidents.

Delphi’s Role

During the June 18 House hearing, Valukas told lawmakers
that Delphi didn’t give his investigators access to the
supplier’s witnesses and received limited response to requested
records.

The parts behemoth, which was spun off from GM in 1997, is
now domiciled in Kent, U.K., but retains extensive operations in
Troy, Michigan, a Detroit suburb. Delphi, which manufactured the
faulty ignition switch to GM’s specifications, has been mostly
silent as the recall became a full-fledged scandal for GM, which
was fined a record $35 million by the Transportation Department.

GM has replaced about 500,000 of the faulty ignition
switches, Cain said today in an e-mail. Delphi has shipped more
than one million replacement switches and plans to have
delivered more than 2 million by the end of August, O’Neal told
the panel.

GM’s lawyers failed the company and the public, Blumenthal
said. He predicted a criminal investigation being carried out by
the Justice Department would find culpability.

“Lawyers are typically supposed to be the ones who make
sure corporations comply with the law in spirit and letter,”
Blumenthal said. “Here the lawyers for GM actually enabled
cover-up, concealment, deceit and even fraud.”

Feinberg said he didn’t know enough about the fact of the
case to have an opinion on GM’s lawyers. He said the parameters
of the compensation plan were set by GM.